Compliance function: Key Persons Regime - Green Paper No. 4 2024

Summary

This is a JFSC green paper (Green Paper No. 4, 2024) seeking industry feedback on the future of the Key Persons regime in Jersey - the rules requiring firms to appoint an MLRO, MLCO and compliance officer (CO) who satisfy 'employment nexus' and 'residency nexus' requirements. It is exploratory and non-binding: no policy position is being adopted, and any changes would require further consultation, a feedback paper, and possibly legislative amendment.

The paper responds to recruitment and retention difficulties for compliance professionals (average MLRO tenure of only 14 months) and to observations in Jersey's MONEYVAL Fifth Round Mutual Evaluation Report about resourcing shortages in AML/CFT compliance functions. It sets out three high-level options for consultation rather than proposing a preferred outcome.

• Option 1: Status quo - retain both the Jersey employment and residency requirements for Key Persons, possibly with enhancements.
• Option 2: Retain the Jersey employment connection for Key Persons but remove the Jersey residency requirement.
• Option 3: Retain the Jersey residency requirement but remove the employment requirement, i.e. allow Key Persons not employed by a Jersey firm.
• Other topics raised: Use of RegTech to ease the resourcing burden, and any other alternative solutions not covered by the three options.

The paper explicitly does not address the senior management functions notice, the Manager of a Managed Entity (MoME) regime, or the anti-money laundering services provider (AMLSP) function, though responses may reference these as contributing to or alleviating the resourcing challenge. No rule changes take effect from this document itself; it only requests written responses, with a feedback paper expected in Q1 2025 outlining next steps.

Applies to

registered persons, supervised persons, financial institutions, trust company businesses, money laundering reporting officers (MLROs), money laundering compliance officers (MLCOs), compliance officers (COs)

Deadlines

• 6 December 2024: Deadline for submitting written responses to the consultation, either directly to the JFSC via SmartSurvey/response form or via Jersey Finance Limited for the coordinated industry response.
• Q1 2025: JFSC intends to publish a feedback paper outlining any further steps following the consultation.